Mortgage products
Location: Mainland Italy only.
Type of Loan: Repayment for purchase or remortgage. Interest-only
loans are available but rare.
Purchaser: Individuals or companies.
Minimum loan amount: €100,000.
Maximum loan amount: None, but must not exceed 70% of mortgage valuation
or purchase price (whichever is lower).
Term: 5 to 25 years up to age 75.
Currency: Euro only.
Rate of interest: See rate guide.
Fees: Italian bank fees vary but are typically around 1% of the mortgage
amount. You should also allow around €500 for the mortgage valuation
and stamp duty of 11% on urban property or 17% on agricultural land.
There is also a charge for registering the lender’s interest
with the land registry. If the vendor is a private individual, you
must pay a further registration tax of 3-4% of the purchase price
if you move in within 18 months, or 10% if you plan to use the property
as a second home. If the vendor is a company, you must pay imposta
sul valore aggiunto or VAT.
Lending criteria
There are two main criteria for determining how much you can borrow:
the value of the property and your financial situation.
Most Italian lenders take into account your existing liabilities,
including mortgage/rent payments, personal and bank loans, and maintenance
payments. When these are added to your proposed Italian mortgage payments,
the total must not exceed 40% (this percentage can vary) of your net
monthly income. For example, if you have a UK mortgage of £200
a month, a car loan of £50 a month, and the proposed Italian
borrowing is £250 a month, your gross monthly pay must be at
least £1,250 or the lender will reject your application.
Proof of income is required by the lender. This can comprise earned
income, pension, investment or rental income. However, not all lenders
take all of these into account when determining how much you can borrow.
Italian lenders also won’t take into account any potential rental
income from the property you are buying.
Savills Private Finance (SPF) has arrangements with a number of Italian
lenders, offering minimal and bespoke underwriting terms and conditions.
Insurance
It is advisable to set up a life assurance policy when taking out
a mortgage. Buildings insurance is compulsory and often sold by the
lender. SPF can provide independent advice for all your insurance
needs.
Valuation
Loans are available up to 70% of the mortgage valuation. Italian banks
lend only on the basis of a mortgage valuation: this is carried out
by a valuer on behalf of the lender, which you pay for.
Legal issues
Once you have found a property you wish to purchase, you must sign
the reservation agreement. The preliminary agreement or compromesso
is a binding legal document obliging both parties to complete the
purchase at a future specified date in the offices of a local Notary
Public. At this stage you have to put down a 10-30% deposit, which
you forfeit if you pull out of the purchase. If the vendor pulls out,
they must pay you twice the sum they received as a deposit. If the
transaction reaches completion, the deposit is taken as a down payment.
You should stipulate that the purchase is conditional on you obtaining
a mortgage, a satisfactory survey, and that the property is free from
all charges and complies with building regulations.
Check what legal costs and government taxes you are liable for before
committing yourself to a purchase or remortgage.
SPF endeavours to secure the loan on your property within your preferred
timescale but delays may occur owing to the Italian legal and administrative
system.
Completion
Completion must be formalised by a local Notary Public who draws up
the sale deed, registers it with the land registry and pays all taxes
and duties on your behalf.
Applying for a mortgage
It is advisable to arrange a mortgage in principle before committing
to a purchase. This will enable you to find out how much you can borrow,
so you don’t waste time looking at properties beyond your budget.
Even if you haven’t found a property that you wish to buy, our
international division can establish your affordability and issue
an approval in principle based on your current financial situation.
If you have already found a property to purchase, we will send you
a full application pack via email or in the post. If the property
is still under construction, we can keep your file open until you
tell us it is ready.
Should you require funds to put towards a deposit, or if you don’t
qualify for an Italian mortgage, we may be able to help raise finance
for your proposed property.
Contact SPF on 020 7877 4710 or email international@spf.co.uk
CHANGES IN THE EXCHANGE RATE MAY INCREASE THE STERLING EQUIVALENT
OF YOUR DEBT
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SAVILLS PLC - INTERNATIONAL DEPARTMENT
SPF is part of the Savills Group, the international property consultancy formed in 1855. The Savills plc International team is
based in London and is dedicated to providing a service to meet an individual's overseas property needs.
For more information about Savills plc - International click here.
